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Central Bank of Taiwan Keeps Key Rates Steady as Economy Expected to Grow Further

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Central Bank of Taiwan Keeps Key Rates Steady as Economy Expected to Grow Further

Taiwan decided to keep its benchmark rates unchanged at 2% as expected, as its economy remains steadfast, according to a Thursday press release from the central bank.

The decision was in line with the forecast made by 27 out of 30 economists surveyed by Reuters.

"With the domestic inflation outlook projected to remain moderate and the domestic economy expected to post solid growth, the Bank, taking a prudent approach to the uncertainty surrounding the global economic and financial outlook and the potential impact of the Middle East conflict on domestic prices and the economy, judged that a rate hold would help sustain sound economic and financial development on the whole," the central bank said in a statement.

The rates on refinancing of secured loans and temporary accommodations were maintained at 2.375% and 4.25%, respectively.

Anticipation of continued growth also prompted the central bank to upgrade its GDP forecast for Taiwan to 9.45% from 7.28% previously. Increased demand for artificial intelligence is a major factor in the outlook.

On the other hand, the central bank raised its headline and core inflation forecasts to 1.91% and 1.90%, respectively. In its March update, it had expected consumer prices to grow 1.8% and 1.75% for the year.

"Since the Board met in March this year, investment in artificial intelligence (AI) and related technologies has continued to expand, supporting further growth in global manufacturing activity. Nevertheless, the conflict in the Middle East has disrupted global energy supplies," the central bank wrote. "Looking ahead, developments in the Middle East conflict, the future course of monetary policy among major central banks, the evolution of U.S. economic and trade policies, and the prospects for AI-related industries could add to uncertainties surrounding the global economic and financial outlook."

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